2016 Annual General Meeting February 09, 2017

Transcription

1 2016 Annual General Meeting February 09, 2017

2 Cautionary Notice Certain statements made in this presentation are forward-looking statements and information that reflect the current expectations of management about the future results, performance, achievements, prospects or opportunities for Titanium Corporation Inc. ("Titanium" or the "Company"). Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. The Company has not commercially implemented Creating Value from Waste ("CVW ") technology and there can be no assurance that the Company's research, pilot programs, and studies will prove to be accurate as actual results and future events could differ materially from those expected or estimated in such forwardlooking statements. Unless otherwise noted, the data and anticipated future benefits contained in this presentation are based on results from the Company's demonstration piloting and have not been proven otherwise. As a result, we cannot guarantee that any forward-looking information will materialize and we caution you against relying on any of this forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. For a description of the assumptions and risks underlying the forward-looking statements in this presentation, refer to the slide at the end of this presentation entitled "Disclaimers" and consult Titanium's management's discussion and analysis for the three month period ended November 30, 2016 dated January 25, 2017 and in other reports filed with the securities regulatory authorities in Canada from time to time and available on SEDAR ( 2

3 2016 AGM Agenda Introduction and 2016 Review Scott Nelson, President and CEO Financial & Markets Review Jennifer Kaufield, Vice President Finance & Chief Financial Officer Operations Review Dr. Kevin Moran, Vice President Process Development Q&A Titanium Corporation January

4 As we enter 2017, our Company is much better positioned to commercialize our technology Company initiated projects in 2016 have enhanced our CVW value proposition, lowered costs, increased benefits, added new applications and strengthened our balance sheet The outlook for the oil sands industry and commercialization of our technology has improved significantly with the recovery of oil prices, pipeline approvals, major project completions, a focus on value-add incremental projects and meeting environmental and tailings regulations Governments are enacting new environmental regulations, carbon pricing, tailings directives and moving forward with funding programs to assist innovation and implementation of new technologies 4

5 Titanium s CVW technology is designed to create additional value from Alberta s oil sands resources Recover valuable commodities from froth treatment tailings (bitumen, solvent, heavy minerals, rare earths) Create a new minerals industry for Alberta (economic growth, diversification, jobs, exports) Reduce emissions from ponds and tailings (GHGs, methane, VOCs, SOAs) and accelerate tailings remediation Reduce environmental impacts on communities and ecology Create value for our shareholders by recovering and marketing minerals, licensing our CVW technology and expanding to multiple oil sands sites Demonstration piloting of CVW technology 5

6 CVW is designed to efficiently integrate with oil sands operations to remediate froth treatment tailings Bitumen Froth Diluted Bitumen OIL SANDS MINING EXTRACTION FROTH TREATMENT BITUMEN UPGRADING and REFINING SOLVENT DILBIT RTR DEPOSIT TAILINGS POND FROTH TREATMENT TAILINGS INTERNATIONAL MARKETS CVW CONCENTRATOR Heavy Minerals Concentrate ZIRCON, TITANIUM & RARE EARTH PRODUCTS TAILINGS MANAGEMENT Oil sands process RECYCLE WATER CVW CONCENTRATE UPGRADING ZIRCON, TITANIUM & RARE EARTH CONCENTRATES CVW CENTRAL MINERALS SEPARATION Oil sands operator or 3 rd party operated Titanium or partner operated 6

7 CVW is underpinned by attractive project economics* CVW preliminary estimates for a standard 250,000 bpd oil sands mining site: Capital Cost : C$345 million Operating Cost: C$39 million Estimated CVW annual recoveries from froth treatment tailings: Bitumen/Solvent 2.1 million barrels Zircon 51,000 tonnes Titanium 25,000 tonnes Business Case Base Low High Unlevered IRR (after taxes and royalties) 26% 22% 30% NPV (10%) C$405 million C$290 million C$505 million Payback 3.9 years 4.5 years 3.4 years Average Annual EBITDA EBITDA Margin Commodity Price Assumptions : - WTI (US$/BBL) - WTI/Bitumen Differential - Zircon (US$/Tonne) C$120 million 75% $60 30% $1,000 C$97 million 71% $40 30% $800 C$140million 78% $80 30% $1,300 CAD/USD Exchange Rate $0.80 $0.70 $0.90 *Preliminary estimated project economics before site integration costs, technology fees, commercial arrangements, deal structuring, final fiscal terms, and financing. Note: Refer to Cautionary Notice Special Note regarding non-gaap financial measures Titanium Corporation January

8 Titanium s CVW technology projects would deliver significant economic benefits for Alberta and Canada Life of projects 30 years Government Revenues¹ Single Site (CDN$ millions) Industry Wide Implementation (CDN$ millions) Alberta Taxes & Royalties $900 $5,400 Federal Taxes $500 $3,000 Total $1,400 $8,400 Direct Capital Investment $400 $2,400 Job Creation Single Site Industry Wide Construction phase jobs 1,000 6,000 Permanent operating jobs ¹Preliminary estimates of 30 year cumulative benefits based on long term assumptions: WTI = $60 USD/bbl, zircon=$1,000 USD/tonne, CAD/USD dollar exchange rate of $

9 FINANCIAL OUTLOOKS AND ASSUMPTIONS The forward-looking information appearing on the previous slides (including the associated preliminary estimates of capital costs, annual revenue, operating expense, earnings before interest, taxes, depreciation, amortization and certain other items (EBITDA), internal rates of return (IRR), and net present values) have been presented to provide investors with management's estimates of the single site economics (before site integration costs, commercial arrangements, technology fees, government fiscal terms, deal structuring and financing) for facilities employing the Corporation's CVW technology. This forward-looking information is based upon: the preliminary estimates of capital costs, operating costs, annual production, commodity recoveries, commodity prices, exchange and discount rate assumptions indicated for each scenario; standard Alberta bitumen royalty rates and a combined federal and Alberta corporate tax rate of 27%. Investors are cautioned that actual results may vary from such forward-looking information. See the Corporation s documents filed with the Canadian securities regulatory authorities on SEDAR at for a description of material risk factors that could cause actual results to differ materially from the financial outlook. Titanium Corporation January

10 CVW technology is well aligned with industry and government priorities and is ready for commercialization Oil Sands Competitiveness Increases bitumen recoveries Reduces operating costs Cost effective tailings solution Reduces solvent losses Reduces carbon intensity Value added by-products New minerals industry Diversification and exports Attractive economics Environmental Leadership Tailings pond avoidance GHG reduction Methane reduction Water conservation VOC and SOA reduction Low carbon minerals Acidification (pyrite) reduction NORM (radioactive) reduction Tailings regulation compliance 10

11 2016 Review 11

12 The oil sands industry outlook improved in late 2016 Industry conditions remained constrained throughout much of 2016 due to low oil prices with operators focused on cost reduction and completing large projects In November 2016, OPEC and certain non-opec countries announced production cuts of 1.8 million bbls/day Two Canadian oil pipeline projects, Trans Mountain and Line 3, were approved by the Federal Government in November 2016, increasing capacity to West Coast tide water and US mid-west markets In January 2017, the new US President approved the Keystone XL pipeline which expands Canadian crude oil capacity to the US Gulf coast Titanium Corporation January

13 Industry made progress on reducing costs and focused on tailings and the environment Mining oil sands operators made significant progress reducing unit operating expenses, reporting reductions to below $30/bbl from prior $40/bbl levels The remaining two large oil sands mining projects at CNRL and Fort Hills expect to be completed in 2017/18 The mining oil sands operators submitted detailed plans for tailings management and remediation in response to Alberta s new Directive 85 tailings regulations Oil sands industry operators cash flows are expected to improve with higher oil prices, lower operating costs and completion of major projects The era of mega projects and major expansions in the mining oil sands sector is likely over Titanium Corporation January

14 The Alberta and Canadian governments announced a number of new environmental initiatives in 2016 In December 2016, Federal and Provincial governments reached a Pan-Canadian Framework on Clean Growth and Climate Change The Federal government announced a requirement for each Province to implement carbon pricing mechanisms to reach $50/tonne by 2022 Methane emissions reductions of 45% by 2025 are being targeted by Ottawa and Alberta with draft regulations expected in mid-2017 Alberta s Climate Leadership Plan implemented carbon pricing of $30/tonne by 2018 and 100 megatonnes/yr cap on oilsands GHGs (current level ~ 70 megatonnes) 14

15 Government funding programs are emerging The Alberta Energy Regulator (AER) enacted Directive 85 requiring detailed plans and timeframes for oil sands tailings/pond remediation including environmental subobjectives for froth fluid fine tailings, acidification, specific additives, gas formation The Federal Government s $2 billion Low Carbon Economy Trust and $1 billion Technology Fund budgeted to be activated in 2017/18 Emissions Reduction Alberta (ERA) launched an initial $40 million funding program for methane reduction technologies Alberta announced a tax incentive program for new investments in small companies including new technology commercialization Titanium Corporation January

16 2016 Company highlights Significantly increased our commercialization activities in 2016 with revised project proposals to oil sands operators which are under evaluation in 2017 Reduced CVW capital cost estimates in line with a 2016 Feasibility-Cost Savings Study by our engineering firm Increased the environmental benefits from our technology related to higher carbon pricing, new regulations and pond avoidance potential Developed industry interest in our integrated end-to-end solution for froth treatment tailings and avoidance of tailings ponds Added new applications of CVW technology including: the recovery of rare earth elements from froth treatment tailings; a test program to recover bitumen from legacy pond tailings Titanium Corporation January

17 2016 Review: Company Highlights Awarded 3 additional patents and filed 2 new patents bringing total patents awarded to 14, plus 7 under review Our Company received wide recognition of our technology: 2016 Award for Environment Innovation at the Global Petroleum Show 2016 World Heavy Oil Congress Award finalist Dr Kevin Moran received a Canada Clean50 Honoree award for 2017 Strengthened our Company s balance sheet and cash position for the next 2 years: Successful $6.5 million financing Repayment of $1 million outstanding debt $1.2 million cash savings from officers and directors compensation paid in share instruments Titanium Corporation January

18 Our 2017 program objectives Partner with industry and government to start front end engineering design (FEED) for a first commercial project implementation of CVW Conduct a joint industry and government testing program for CVW bitumen recovery from legacy pond tailings Commission an expert study of markets and potential partners for production and exports of zircon and titanium Business development with potential customers and strategic partners Qualify CVW technology for government funding and incentive programs aimed at innovation, climate change and technology commercialization Titanium Corporation January

19 FINANCIAL & COMMODITY REVIEW JENNIFER KAUFIELD VP FINANCE & CFO 19

20 In 2016, we strengthened our Company s balance sheet for commercialization while continuing to conserve cash and control expenses Closed $6.5 million rights offering December 16, 2016, recapitalizing our Company for over two years operations Repaid $1.0 million outstanding debt and retired the $1.5 million credit facility put in place in October 2015 Reduced 2016 cash operating expenses by $0.4 million from 2015 Reduced cash compensation to management through increased use of stock based compensation and continued 100% stock based Director s compensation $1.1 million of stock based compensation was used in 2016 in place of cash compensation Management and Directors increased their direct Company ownership to 21.3% from 16.2% after participation in the rights offering 20

21 2016 FINANCIAL SUMMARY Description 2016 ($ millions) 2015 ($ millions) R&D Expenditures¹ $0.7 $0.7 G&A Expenditures² $1.9 $1.7 Amortization, Interest & Finance Expenditures $0.4 - Net Loss $2.9 $2.5 Assets $0.7 $0.9 Cash Position $0.6 $0.9 (1) Includes $0.2 million and $0.3 million of non cash equity based compensation expense in 2016 and 2015 respectively (2) Includes $0.8 million (2016) and $0.4 million (2015) in non cash equity based compensation expense. Cash G&A expenses were reduced by $0.4 million in 2016 compared to

22 Zircon price and supply/demand update Kevin to update price graph from latest TZMI report Zircon prices and demand were relatively flat in 2016 Continuing shift in China to digital printing and glazed tiles with higher zircon content; substitution has peaked Industry reports the highest quality and most accessible zircon deposits are mined out Zircon is a co-product and locked into the TiO₂ cycle Industry forecast is for modest growth with new supply required post-2019 Titanium Corporation January 2014 (Source: Independent minerals consultancy TZMI) Imports ('000 tonnes) /1/09 1/1/10 Imports Price 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/ Price (USD/tonne, CIF) 22

23 Oil price and supply/demand update Oil prices recovered from 2016 lows of WTI $30/bbl to current WTI $50-54/bbl price range In November 2016 OPEC and certain non-opec producers agreed to reduce their production by ~1.8 million bbl/day Global oil demand continues to grow between 1.0 and 1.5 million bbls/yr World oil supply/demand forecast by the United States EIA to move into balance in

24 Summary of Markets: Higher oil prices combined with effective industry cost reduction measures will improve future oil sands industry performance and cash flow Approval of new pipelines (Trans Mountain, Line 3, Keystone XL) will improve future market access and potentially reduce price discounts of Alberta bitumen Minerals industry prices and demand remained relatively stable; the industry is optimistic about future demand and prices with forecasts of new supply required around 2020 High quality, accessible, low risk zircon resources are reported by industry as becoming scarce Titanium s proposed projects offer attractive low cost incremental bitumen production and create a new competitive minerals export industry to meet future world demand Titanium Corporation January

25 OPERATIONS REVIEW DR. KEVIN MORAN VP PROCESS DEVELOPMENT Building our patent portfolio Tailings management and new AER Directive 85 Emerging opportunities Pond tailings Rare earths Front End Engineering Design The Path to Commercialization 25

26 Continuing to build our patent portfolio Concentrate Production patents issued patents filed Bitumen Recovery Patents (#) Solvent Recovery Heavy Minerals Production Three new patents received in past 12 months Two new patents filed in 2016 Total of 21 patents filed, 14 issued, seven under review Core technologies protected by Canadian and US patents Titanium Corporation January

27 Directive 85 strengthens tailings regulation 2015 Tailings Management Framework Fluid Tailings Inventory (millions of mᶾ) Manage fluid tailings volumes during and after mine operation in order to decrease liability and environmental risks 2016 Alberta Energy Regulator Directive 85 Requires Ready to Reclaim tailings deposition Source: Lower Athabasca Region Tailings Management Framework for the Mineable Athabasca Oil Sands, March, 2015 Minimize environmental effects of deposition Manage risks associated with froth treatment tailings, gas emissions, acidification 27

28 Directive 85 Ready-to-Reclaim Tailings (RTR) requirements 100 CVW TM Thin Lift Deposition 10 Shear Strength (kpa) CVW TM Centrifuged Fine Tailings Thin Lift Deposition Centrifuged Fine Tailings Thickened Fine Tailings Solids Concentration (%wt) CVW technology integrated with thickening/thin lift meets D85 requirements efficiently due to reduced hydrocarbon content CVW is the only technology to offer additional environmental benefits including fugitive methane emissions reductions, pyrite management and NORMs reductions 28

29 Titanium s CVW integrated End-to-End tailings solution Tailings bitumen and solvent removed using Titanium s patented technologies, Deliver meaningful GHG (up to 1 Mt/yr/site) & VOC (50 kt/y) emissions reductions Minerals exhibiting radioactivity are segregated into minerals concentrates and transported off-site, leading to 80% reduction in radioactivity in beached sands; 70% pyrite removed from fluid tailings for effective management Thickener operates at reduced polymer dosages (by up to 67%) and enhanced performance allows for heat recovery and integration, further offsetting GHG emissions (~0.1 Mt/yr/site). Fitfor-reuse water recycled to process applications and/or low grade utility purposes to offset fresh water intake from Athabasca River Tailings dewater efficiently to exceed 5 kpa strength in less than 1 year; reducing fines loading to tailings pond Fit-for-reuse water recycled to extraction process 29

30 Emerging Opportunities Recovering bitumen from pond tailings utilizing CVW technology Titanium s CVW TM technology is designed to recover bitumen from tailings with high fines concentrations Suited for mature fine tailings (MFT) and fluid tailings treatments Titanium is conducting a 2017 testing program in collaboration with industry, government and a research institution Source: 30

31 Emerging Opportunities Rare Earth Elements (REE) testing and process development XRF analysis determined composition of rare earth elements in Titanium s Primary Dry Circuit magnetics stream contains about 4% rare earth oxides, including cerium (Ce), lanthanum (La) and praseodymium (Pr) complexed primarily in monazite. A 2016 testing program was conducted together with our independent minerals engineering firm Testing produced a REE concentrate with REE enrichment of over 4x Investigating opportunities to further increase REE concentrations 31

32 Feasibility Conceptual Design Design Basis Memo Planning Front-End Engineering Design (FEED) A staged approach used to control project expenses and thoroughly plan a project in advance of detailed engineering business case justification block flow diagrams AACE Class 10 estimate project schedule process flow diagrams AACE Class 4 estimate plant layouts & equipment lists HAZOP reviews AACE Class 3 estimate Key aspects involve site-specific CVW integration with operater s processes including: Plot location Process and utility tie-ins with existing infrastructure Operating cost savings and environmental opportunities Titanium Corporation October

33 The Path to Commercialization We are collaborating with our partners on planning, funding and executing project commercialization FEED Detailed Engineering Procurement and Construction Minerals Dry Mill Plant Concentrator Plant Titanium Corporation October

34 Disclaimers This presentation contains forward-looking statements and information that reflects the current expectations of management about the future results, performance, achievements, prospects or opportunities for Titanium. Forward-looking information is provided in this presentation in the discussion of Titanium's research and development results and the expected benefits of Titanium's technology and results of the implementation of Titanium's technology on a commercial scale. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "believe", "could", "might", "intend", "project", "should" or "continue" or the negative thereof or similar variations and expressions. Forward-looking information is presented in this presentation for the purpose of assisting investors and others in understanding certain key elements of our business plan and results of the research and development phase of our technology, as well as our objectives, strategic priorities and business outlook, and in obtaining a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Forward-looking information, by its very nature, is subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking information and that our business outlook, objectives, plans and strategic priorities may not be achieved. In particular, the forward-looking information contained in this presentation is based (in whole or in part) on the results of our research, pilot programs and studies described in this presentation. The Company has not commercially demonstrated its technologies and there can be no assurance that such research, pilot programs, and studies will prove to be accurate as actual results and future events could differ materially from those expected or estimated in such forward-looking statements. As a result, we cannot guarantee that any forward-looking information will materialize and we caution you against relying on any of this forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. In addition to other factors and assumptions which may be identified in this presentation, assumptions have been made regarding, among other things: future oil and zircon prices and the impact of lower prices on activity levels and cost savings of oil sands producers; the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the ability of the Company to enter into commercial contracts with oil sands producers and to achieve commercialization of the CVW technology; the ability of the Company to retain qualified staff; the ability of the Corporation to obtain financing on acceptable terms; the translation of the results from the Company's research, pilot programs and studies into the results expected on a commercial scale; the ability to obtain and maintain the Company's intellectual property; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its CVW technology. In particular, this presentation contains forward-looking statements pertaining to the following: the commercialization of the CVW technology; the benefits of the CVW technology on a commercial scale and the translation of the benefits of the CVW technology from pilot performance to commercial performance; the potential environmental benefits of the CVW technology, including reductions in greenhouse gas emissions and volatile organic compound emissions ; the anticipated cost savings benefits of the CVW technology; anticipated operating costs after implementation of the Company's technology; the creation of a new minerals business; the utilization of hydrocarbon free hot water for recycling and hydrocarbon free tailings for thickening; anticipated minerals concentration in tailings following implementation of the CVW technology; negotiations with oil sands producers with respect to adopting the technology; supply and demand for oil and zircon; expected market impacts on oil sands operators and the minerals industry; the suitability of HiTi product for commercial markets; and the anticipated reduction of solvent losses in bitumen production. 34

35 Disclaimers (con't) The actual results could differ materially from those anticipated in these forward-looking statements as a result of, including but not limited to, the following risk factors: ability to obtain commercial contracts with oil sands producers; oil sands producers adopting and integrating the CVW technology with their operations; expectations regarding the ability of the Company to raise capital; risks and uncertainties associated with the Company's CVW technology to operate on a commercial scale; volatility in market prices for oil and zircon; liabilities inherent in oil operations; competition for, among other things, capital and skilled personnel; incorrect assessments of the value of the Company's research and development program; operational execution or technical difficulties in connection with operating the CVW technology; fluctuations in foreign exchange interest rates and stock market volatility; uncertainties associated with changes in legislation including, but not limited to, changes in income tax laws and to oil and natural gas royalty frameworks; ability to obtain and maintain intellectual property, including patents for the CVW technology; inadequate protection of the Company s intellectual property or potential litigation with respect to any intellectual property infringements; the impact of Canadian federal and provincial governmental regulation on the Company and the oil and natural gas industry; competition for the development of similar technology; expected future oil sands production and bitumen losses; prospective results of operations, financial position or cash flows that are based on assumptions about future economic conditions and courses of action ability to obtain government grants and funding; and risks and uncertainties associated with liquidity and capital resources. Readers are cautioned that the foregoing lists of assumptions and risk factors are not exhaustive. For addition descriptions of the assumptions and risks underlying the forward-looking statements in this presentation, consult Titanium's management's discussion and analysis for the three and six month periods ended February 28, 2015 dated April 16, 2015 and in other reports filed with the securities regulatory authorities in Canada from time to time and available on SEDAR ( The forward-looking information contained in this presentation describes our expectations as of February 12, 2015 and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking information contained in this presentation whether as a result of new information, future events or otherwise. The forward-looking statements contained in this presentation and are expressly qualified by this cautionary statement. 35

36 For additional information on Creating Value from Waste please contact us: Scott Nelson Titanium Corporation President & Chief Executive Officer Suite 700, th Ave. S.W Calgary, Alberta T2P 0P7 Jennifer Kaufield Vice President Finance & CFO Titanium Corporation is an Associate Member of Canada s Oil Sands Innovation Alliance ( COSIA ), a Member of the Alberta Chamber of Resources and The Canadian Chamber of Commerce. The Company s shares are listed on the TSX Venture Exchange ( TSXV ) under the symbol TIC. Titanium Corporation wishes to gratefully acknowledge funding received from Sustainable Development Technology Canada ( SDTC ), the Government of Alberta and the National Research Council Canada. Titanium Corporation October